In a land acquisition compensation dispute over the Aspal Extension Drain in Punjab’s Fazilka district, the Supreme Court has struck down the High Court’s “radial” step-down pricing as arbitrary and restored a uniform Rs 5 lakh per acre along with 50% severance charges on the landowners’ cut-off land.
New Delhi: The Supreme Court has partly allowed 47 appeals by landowners from six villages in Fazilka, Punjab, whose land was acquired in 2000-01 for an 18.42 km drainage channel, restoring the Reference Court’s market value of Rs 5,00,000 per acre and its 50% severance award, and setting aside the Punjab and Haryana High Court’s 2019 judgment that had graded compensation by distance from Fazilka town [Surinder Ahuja and Another v. State of Punjab and Another].
A Bench of Justice Dipankar Datta and Justice Sheel Nagu, in a judgment authored by Justice Sheel Nagu on September 29, 2026, directed that the additional compensation be worked out and paid within six months.
The case
Land in Karni Khera, Odian, Awa, Kotha, Alamshah and Salem Shah villages was acquired under the Land Acquisition Act, 1894 for the Aspal Extension Drain, a ditch canal 264 to 340 feet wide. The Land Acquisition Collector’s award of August 6, 2001 fixed Rs 2,25,000 per acre across the project and gave nothing for severance, though landowners said the drain had split their holdings into unusable fragments.
The Reference Courts enhanced the rate to Rs 5,00,000 per acre for several villages, relying on a 1996 award of Rs 5 lakh per acre for land in nearby Sultanpur acquired for a sludge carrier, and granted severance charges. On March 29, 2019 the High Court adopted a “hub-and-spoke” model: it treated Awa and Kotha, nearest Fazilka’s municipal limits, as the hub at Rs 3,39,000 per acre and cut Rs 20,000 per acre for each village tier moving away, also citing proximity to the Indo-Pak border. It fixed severance at 40% of the value of the acquired land.
Radial model “arbitrary”, parity restored
The Bench held that the High Court wrongly rejected the Sultanpur benchmark, since the Karni Khera land lay just 1.5 km away on the same road and was acquired for the same integrated drainage purpose. The State’s own SDO Irrigation had admitted that Fazilka’s urban abadi was expanding towards the acquired land, which also abutted a national highway and lay near the BSF headquarters and a college. The Court also faulted the 20% “smallness” cut applied to a sale exemplar.
On the step-down formula, the Bench said it ignored transaction-based local evidence, including the 9% urban stamp-duty rate charged for Karni Khera, and produced anomalies: a village 10 km from the border got Rs 2,79,000 per acre while Alamshah, 1.5 km from the border, got Rs 3,19,000. It held:
“By ignoring this transaction-based local evidence and imposing an abstract mathematical reduction, the High Court’s radial step-down model created an artificial, legally unsustainable disparity between a contiguous tract of land acquired under a single notification.”
Relying on Krishan Kumar v. State of Haryana and Ali Mohammad Beigh v. State of Jammu and Kashmir on parity in project-wide acquisitions, it restored “the uniform market value of Rs. 5,00,000/- per acre across all contiguous villages under challenge.”
Severance on the land left behind
The Court held that the High Court made “a fundamental legal error” under Section 23(1) Thirdly of the 1894 Act by calculating severance on the acquired strip rather than on the remaining land. In the lead claimant’s case, 79 kanals were acquired but 249 kanals were left cut off. The State’s witness had admitted the drain was about 100 feet wide with high banks and could not be crossed without a bridge, and the High Court itself recorded that bridges were 2 km apart and too narrow for combine harvesters. The Bench said:
“Under Section 23(1) of the Act of 1894 the damage caused due to severance damage is explicitly designed to compensate for the diminution in value of the unacquired remaining land. The Reference Court’s award of 50% of the value of the unacquired land was fully justified.”
Where the State succeeded
The Bench upheld the High Court on three issues. Compensation for fruit trees stays limited to the 280 trees pleaded in the reference petition (Rs 5,38,300), not the 482 more allegedly lost on unacquired land, as the reference petition defines the dispute. Following State of Punjab v. Amarjit Singh, it held that solatium under Section 23(2) and additional amount under Section 23(1A) are payable only on the market value of land, not on trees, tubewells or other auxiliary assets. The flat Rs 50,000 per tubewell for displacement was also affirmed.
The additional compensation is to be paid within six months. If any amount becomes recoverable from a landowner after recalculation, it may be recovered within nine months, after written notice and a hearing.
Why The Land Acquisition Compensation Judgment Matters
The ruling limits courts’ use of formula-based “belting” or distance-graded valuation for land acquired under one notification for a single linear project. Where the land is contiguous and acquired for the same purpose, owners must be treated alike unless there are clear, objective reasons, and local evidence such as nearby awards and stamp-duty classifications counts for more than an abstract model.
On severance, the judgment confirms that compensation must track the harm to the land left behind. For canals, drains and highways that cut farms in two, the measure is the loss in value of the stranded remainder, not a percentage of the narrow strip taken.
Case Title: Surinder Ahuja and Another v. State of Punjab and Another [Civil Appeal Nos. 3800-3803 of 2026, with connected appeals]
Neutral Citation: 2026 INSC 1068
Bench: Justice Dipankar Datta and Justice Sheel Nagu, Supreme Court of India
Date of Judgment: September 29, 2026
Appearances: Senior Advocate Ajay Tewari for the Appellants; Senior Advocate Sanjay Hegde for the Respondents